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DISCLAIMER:All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Monday, November 07, 2011

Financial Markets are Clinging...

I've mentioned a number of times recently that it's my opinion that the equities markets will need the Financial markets on board in order to resume a meaningful and convincing advance...at the moment, they (Financials) are grappling with the middle of the Bollinger Bands on their Daily charts, after bouncing at the beginning of October.

As can be seen on the first Daily chartgrid below, the Financials ETF, XLF, is moderately stronger than the individual bank stocks (which are all just above their 50 sma (red), except for BAC)...they are all a considerable distance below their 200 sma (pink), in contrast to the YM, ES, NQ & TF which are much stronger, as shown on the second Daily chartgrid below (the action on those is currently taking place either above or below their 200 sma).

It should be noted, however, that all these charts are still under the influence of a Death Cross (with the 50 sma below the 200 sma), and price is subject to a resumption of further bearish downside movement until the positioning of these moving averages is reversed with conviction.

Should the 4 e-mini futures indices continue to advance, we will need to see the Financials continue to advance, as well. The percentage comparison chart below of the Dow 30, S&P 500, Nasdaq 100, Russell 2000, and XLF shows that XLF has outpaced the Dow, S&P and Nasdaq since its October 4th lows in terms of percentage gained from that date.

The percentage comparison chart below of XLF, GS, JPM, C, BAC, & MS shows that BAC has begun to show relative weakness since November 4th (as confirmed on the Daily chartgrid above) and is one to watch over the coming days/weeks...to either play "catch up," or potentially signal a reversal in the Financials, and possibly the equities markets.